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Big Changes to College Degree, Experience Requirements

By Isaac Peck & Laura Mazzenga, Working RE Magazine

Effective May 1, 2018, the Appraiser Qualifications Board (AQB) adopted revisions to the Real Property Appraiser Qualification Criteria (Criteria) that substantially reduce the requirements to become a Licensed or Certified appraiser. Specifically, the AQB decided to adopt sections one, two, and four of its most recent 4th Exposure Draft, issued November 1, 2017.

After over two years of deliberation and four Exposure Drafts, the hotly debated Bachelor’s degree requirement for the Certified Residential credential has finally been decisively neutralized. The new Criteria allows for several alternative tracks, including a grandfather clause, which will allow candidates to obtain the Certified Residential credential in lieu of earning a Bachelor’s degree. The number of experience hours required for each credential and the timeframes for obtaining that experience have also been reduced.

Degree Alternatives
In lieu of a bachelor’s degree, the AQB will now allow the following alternatives to meet the requirements for the Certified Residential credential:

1. An associate’s degree in business, finance, accounting, economics, or similar programs, or

2. Successful completion of 30 college semester credit hours in specified topics, or

4. Any combination of #2 and #3 that includes all of the topics identified.

The topics to be covered in the 30 college semester credit hours and/or CLEP tests include English Composition, Micro-Economics, Macro- Economics, Finance, Algebra, Geometry, Statistics, Computer Science, Business or Real Estate Law, and other closely related topics.

In addition to allowing for alternatives to the bachelor’s degree for the Certified Residential credential, the AQB has also completely eliminated all college-level education requirements for the Licensed Residential credential.

Grandfather Clause
In addition to the alternative educational tracks outlined above, the AQB has also included a grandfather clause for Licensed Residential appraisers to receive the Certified Residential credential.

As an alternative to the Bachelor’s Degree requirement, individuals who have held a Licensed Residential credential for a minimum of five years may qualify for a Certified Residential credential by satisfying all of the following:

1. No finally adjudicated disciplinary action affecting the Licensed Residential appraiser’s legal eligibility to engage in appraisal practice within the five years immediately preceding the date of application for a Certified Residential credential;

Experience Requirements
In addition to changing the educational requirements to be an appraiser, the AQB has also decreased the experience hours required (and the timeframes) for the Licensed Residential and Certified Residential credentials. This is in large part due to the enhanced requirements for education and examination. Updated experience requirements are as follows:

*Note: although hours have stayed the same, timeframe has decreased from 30 months.

In explaining why these changes are sensible, the AQB emphasizes the difference between being qualified and competent, writing that the AQB Criteria “must ensure that an individual is qualified to appraise, even though that individual may not necessarily be competent yet. Competency is gained over time based on an appraiser’s practice. Regardless of the amount of experience required to obtain a credential, there will always be assignments appraisers are not competent to perform at the time they initially receive a credential.”

Mark Lewis, Chair of the Appraiser Qualifications Board, said, “The importance of qualified appraisers performing solid valuations on residential and non-residential real property cannot be understated.” He continued, “The Real Property Appraiser Qualification Criteria is a living document that needs to fully reflect ongoing changes in the marketplace. These changes were adopted with the ultimate goal of protecting the public trust.”

What Happens Now
While many trainee Licensed Residential appraisers welcome this move by the AQB, it will ultimately be up to each state to determine if and when it will lower their own requirements for appraisers.

The AQB writes that because states are legally permitted to possess requirements that are greater than, but not less than the AQB Criteria, there will be no future effective date that states must meet to adopt the new AQB Criteria. In essence, states could choose to maintain higher requirements that the AQB has set. The AQB writes that “state appraiser regulatory agencies could then elect to implement the revised Criteria whenever they deem appropriate.”

Appraisers curious about when and if their state will adopt these new changes should contact their state appraisal board.

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Backstory
The bachelor’s degree requirement for the Certified Residential credential was originally adopted by the AQB on January 1, 2015. However, it didn’t take long for the AQB and the industry to begin debating the merits of such a requirement. By July 2015, the AQB had already written a “concept paper” exploring alternatives to the bachelor’s degree requirement and in early 2016 the first Discussion Draft was published citing a “a perceived shortage of real estate appraisers” as a key reason the industry should evaluate alternatives to a traditional four year degree.

A very passionate debate among appraisers quickly followed. Over the last two years, Working RE has received hundreds of comments on this issue, some in favor and others against the degree requirement. The AQB writes that it received over 1,300 comments on the issue, indicating there has been “an unprecedented level of feedback…and a great divergence of opinion.”

Those appraisers in favor of alternatives to the bachelor’s degree requirement argued that it unfairly penalized Licensed appraisers from advancing in their careers, while those who argued against the alternative said that lowering the requirements to be an appraiser waters down the profession and devalues the important work that appraisers do. (See Training the Next Generation and Dispelling Myth of Appraisal Shortage.)

While the AQB writes that it has long considered a Bachelor’s Degree to be appropriate for the Certified Residential credential, it also “recognizes that shifts occur in the marketplace for appraisal services” and that the public trust can be served “without requiring college-level education for the Licensed Residential credential, and by allowing alternatives to the Bachelor’s Degree requirement for the Certified Residential credential.”

About the Authors
Isaac Peck is the Editor of Working RE magazine and the Director of Marketing at OREP, a leading provider of E&O insurance for home inspectors, appraisers, and other real estate professionals in all 50 states and D.C. He received his master’s degree in accounting at San Diego State University. He can be contacted isaac@orep.org. Laura Mazzenga is the new Marketing and Operations Coordinator at OREP, and has a bachelor’s degree in journalism from Indiana University of Pennsylvania. She can be contacted at laura@orep.org.

Comments (4)

Historically, before lenders were denied access to the appraisers, the problem has not been undervaluation, but overvaluation. It is silly to say that an appraiser cannot recognize the value difference between the junk next door and the newly rehabbed house. They also have the ability to look at recent sales of rehabbed houses and see for themselves what the after-repair value (ARV) is. They are just as capable of comparing market rent to sale price to figure out if the house is fairly priced. On the other hand, a lot of ready, willing and able buyers get misled by even their own buyer”s agents into paying too much.

by Nancy Burnett

The reason many residential appraisers left the business has more to do with required report content changes and AMCs taking too much of the fee. I have 28 years experience doing appraisal work. A report takes 3 times longer to complete than in the 1990s yet the fees have not multiplied by 3. Implementation of UAD format, MC Appraisal Addendums and many other changes have not increased the quality of Appraisal content yet they greatly increase time spent on each report. Appraisers also have problems of MLS data not providing the information needed for UAD reports. Appraisers are asked to justify and provide proof for each adjustment and yet many are pushing for alternative valuation products where the Appraiser does not visit the property with the viewing done by some other person. Now that is about the dumbest idea anyone has come up with. I work in rural market areas. I have implemented many types of change over the past 28 years and am not afraid of change. I will not be part of one of the worst ideas to hit our industry. Couple that idea with some recent changes in required education and we have a perfect storm in the making.

by Patricia Lucas

I have 19 years of experience as a licensed appraiser and have been a strong believer that just because an appraiser has a bachelors degree and has passed the exam to upgrade their licensure to Certified Residential does not necessarily make that person a good appraiser. I am all for the changes that are being made. I would also like to see a change in the qualifications to be a supervisory appraiser based on my above comments on experience.

Yet one more reason TAF has outlived it’s usefulness. The ‘path’ is ridiculous and will not encourage more people to enter the profession.

Neither the United States Congress or The Appraisal Foundation AQB saw a need for any type of degree when FIRREA was passed and the first versions of USPAP were created.

Imposition of the degree requirements was a badly planned policy that they simply won’t let go of. Instead, they paid near meaningless lip service to any side of the debate that did not support their preconceived ideas and plan to do whatever they wanted regardless of any ‘debate’.

All AQB has done is to confirm that the tests for all certification levels are meaningless. That they fail to adequately test for competency and specific knowledge.

So, why should we accept that the same Board that cannot develop a meaningful certification test has any greater insight into how degrees will ‘improve the herd’?